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ekinnee's Avatar ekinnee ekinnee is offline
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There is no better time to start up a startup



Three years ago, at the height of the boom among the new wave of internet companies, I went along to one of the many burgeoning meet-ups of entrepreneurs, expecting to find plenty of hungry, innovative young startups. I found one or two really good companies - but a whole load of carpet baggers, even gap-year students caught up in the hype.

I asked one what his business model was. "Ah, hold on a sec," said the fresh-faced youth, turning to his friend across the room "Er, Charlie, mate, what's our business model again?"

This incident summed up the summer of 2007, which, if technology

startups were hippies, we'd be calling the Summer of Love. The rise of Facebook had set the touch-paper alight on a wave of new players.

But with the recession just 18 months or so later, that "niche social network aimed at tortoise owners" suddenly didn't look so hot. The gap-year students and other chancers dried up. So who has been left behind? Why, the real entrepreneurs who have been waiting in the wings for the perfect conditions for a startup: a downturn.

In a recession, human resources are cheaper as more skilled people come on to the market. Costs, such as office space and PCs, are lower. Business plans start to focus on clear revenue models, not crazy ideas. There is less competition as big companies can't afford to innovate and startups run leaner and meaner, making them stronger when the good times return.

So how does this apply to media and tech startups? In theory you should wait for the economy to get better, as one might if one were starting a restaurant. However, technology marches on. Ten years ago we complained how bad broadband was. Now we can stream Doctor Who over our laptops in HD via BBC iPlayer. Ten years ago people were worried about "social networking". Today someone adds "now single" to their Facebook profile and no one bats an eyelid.

Plus, with the recession, people are spending longer and longer online, whether it's for entertainment or hunting down bargains. As a consequence the traditional media space is in dire straits - but there are still problems in digital media that need to be fixed if those revenues are to be replaced. Enter the startup.

The music industry, for instance, is looking for something to help them own the customer, instead of the retailers. Apple iTunes hasn't done it. Spotify.com is trying to do it. While at the live music end, Songkick, Music Glue and Supajam are just three UK startups playing in that space.

In the online advertising world, few other than Google have come up with new ideas. Now, London-based Skimbit strikes affiliate deals with retailers on behalf of media owners but puts the publishers in charge of which deals they run. And in the online video world, Quick.tv is a startup from Newcastle addressing the issue of controlling advertising in online video for publishers.

Gaming has already proved itself a billion-pound business in the console market, but what about online? A world with 3D gaming inside the web browser is already here, independent of the big games publishers. That's a great opportunity for a startup like Mind Candy's Moshi Monsters, which combines gaming with online learning for children.

The list goes on. Dopplr is a travel social network that lets travellers broadcast their intention to travel somewhere in the future, thus making those happy coincidences less coincidental. Comufy users can manage all their different means of communication, and get their messages in the most appropriate manner, be it text, IM, email etc. SeatWave is a leading fan-to-fan ticketing startup in the secondary ticketing market. Huddle is aimed at cost-effective collaboration tools for small to large businesses. In fact, vast swathes of problems remain that only technology companies will solve - and we still haven't even seen a tenth of those companies appear.

There is also the question of funding. Tech media companies are still finding it hard to attract venture capitalists, but for startups there are an increasing number of alternative options, such as ProFounders, the fund set up by Bebo's Michael Birch and Brent Hoberman of LastMinute.com fame, or Seedcamp, the annual startup competition.

So, what do we have? The right economic climate and lots of market spaces left to fill. And - for the right people, teams and ideas - capital. Just remember which companies started up in the mid-1970s - one of the world's worst economic dips? Microsoft and Apple. Now all you have to do is go and do it.

Source: Mike Butcher, The Guardian
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Erin Kinnee
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carolinem's Avatar carolinem carolinem is offline
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Great article Erin - thanks!
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